Dairy sector to see Rs 140-billion investment in 3 years: CRISIL
Encouraged by rising demand for value-added products, the dairy sector in India is likely to see Rs 130-140 billion of investment in the next three years, says rating agency CRISIL.
To strengthen the procurement and processing infrastructure, companies in the organised sector have invested a similar amount in the past three years. CRISIL’s recent study says the Indian dairy industry would see compounded annual growth (CAGR) of 14-15 per cent annually for the next three years.
Companies with a focus on value-added products are set to do well but those with focus on bulk liquid milk selling would remain laggards, says the study, due to oversupply of liquid milk as a commodity.
“Organised dairies are likely to see spending of Rs 140-billion over the next three (financial) years fiscals, similar to the previous three, to enhance processing capacity by 25-30 per cent and strengthen milk procurement. Prudent funding mix and better cash generation will keep the capital structure of organised dairies satisfactory, with gearing of 1-1.2 times, in spite of sizable capital expenditure,” said Poonam Upadhyay, associate director.
Source: Business Standard